SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by the Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Tri City Bankshares Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2)and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
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TRI CITY BANKSHARES CORPORATION
6400 South 27th Street
Oak Creek, Wisconsin 53154
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 13, 2007
TO THE SHAREHOLDERS OF TRI CITY BANKSHARES CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of Tri City
Bankshares Corporation will be held at Tri City National Bank, 6400 South 27th
Street, Oak Creek, Wisconsin 53154, on Wednesday, June 13, 2007 at 9:30 a.m.,
for the following purposes:
(1) To elect fourteen members of the Board of Directors to serve until the
2008 Annual Meeting of Shareholders and until their successors are
elected and qualified; and
(2) To transact such other business as may properly come before the annual
meeting or any adjournments thereof.
Holders of common stock of record at the close of business on April 26, 2007
will be entitled to notice of, and to vote at, the annual meeting, or at any
adjournment thereof.
All shareholders are cordially invited to attend and participate in the annual
meeting in person. We urge you to sign, date and return the enclosed proxy
whether or not you expect to attend the annual meeting in person. Your proxy
will not be used if you subsequently decide to attend the annual meeting and
vote your shares in person, or if you revoke your proxy by any other lawful
means.
By Order of the Board of Directors,
/s/Soctt A. Wilson
Scott A. Wilson, Secretary
Oak Creek, Wisconsin
May 7, 2007
TRI CITY BANKSHARES CORPORATION
6400 South 27th Street
Oak Creek, Wisconsin 53154
PROXY STATEMENT
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This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Tri City Bankshares Corporation (the "Corporation")
to be voted at the Annual Meeting of Shareholders to be held at Tri City
National Bank, 6400 South 27th Street, Oak Creek, Wisconsin 53154, on June 13,
2007 at 9:30 a.m., for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. The solicitation is made by the mailing of this
proxy statement with its enclosures. No other solicitation is contemplated;
however, if it is necessary to assure adequate attendance at the annual meeting,
the Corporation's Board of Directors may, if it deems it advisable, make a
further solicitation by mail, telephone, facsimile, and/or personal interview
for proxies. Such solicitation will be made by the officers of the Corporation
and will be limited in extent. The total cost of the solicitation, including
reimbursement of banks, brokerage firms, custodians, nominees, and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of the Corporation's common stock, $1.00 par value (the
"Common Stock"), will be borne by the Corporation. The approximate date on which
this proxy statement and accompanying proxy card and annual report are first
being mailed to shareholders is May 7, 2007.
Shareholders are asked to complete, sign and return the enclosed proxy. The
proxy may be revoked by you at any time before it is voted at the annual
meeting. Prior to the annual meeting, this may be done by execution of a
later-dated proxy or by written revocation sent to the Secretary of the
Corporation, Mr. Scott A. Wilson, at the office of the Corporation, 6400 South
27th Street, Oak Creek, Wisconsin 53154. Alternatively, the proxy may be revoked
at the annual meeting by oral or written request to the Secretary of the
Corporation.
Only shareholders of record at the close of business on April 26, 2007 will be
entitled to vote at the meeting. There were 8,822,945 shares of the Common Stock
of the Corporation outstanding on the record date, each share being entitled to
one vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following information is based upon information provided to the Corporation
by the persons named below and sets forth, as of March 29, 2007, except as
otherwise indicated, information regarding the beneficial ownership of shares of
Common Stock by (a) persons known by the Corporation to own beneficially,
directly or indirectly, more than 5% of the Corporation's Common Stock; (b)
directors, nominees for director and certain executive officers; and (c) all
directors and executive officers of the Corporation as a group. Except as
otherwise indicated, the address of each beneficial owner of more than 5% of the
Common Stock listed below is 6400 South 27th Street, Oak Creek, Wisconsin 53154.
Amount and Nature
of Beneficial Percent of
Name of Beneficial Owner Ownership (1) Class
------------------------ ------------- -----
Frank J. Bauer 76,032 *
William N. Beres 15,282 *
Sanford Fedderly 203,916 2.3%
Scott D. Gerardin 9,524 *
William Gravitter 619,083 7.0%
Henry Karbiner, Jr 215,180 2.4%
Christ Krantz 269,091 3.0%
Brian T. McGarry 159,138 1.8%
Robert W. Orth 36,063 *
Ronald K. Puetz 48,707 *
Agatha T. Ulrich 2,064,009 23.4%
Agatha T. Ulrich Marital Trust 1,949,028 22.1%
David A. Ulrich, Jr 226,762 2.6%
Ulrich Voting Trust 3,000,000 34.0%
William J. Werry 105,000 1.2%
Scott A. Wilson 40,170 *
All directors and officers
as a group (14 persons) 3,895,006 44.1%
All directors, officers and
beneficial owners of more than
5% of the Common Stock as a group
(15 persons) 5,844,034 68.4%
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* Less than 1%
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(1) Nature of beneficial ownership is direct unless otherwise indicated by
footnote, and beneficial ownership, as shown in the foregoing table,
arises from sole voting and investment power, except as otherwise
indicated by footnote.
(2) Includes 7,500 shares registered in the name of Mr. Bauer and his
wife, as joint tenants, as to which Mr. Bauer has shared voting and
investment power; and 2,640 shares registered in the name of Mrs.
Bauer.
(3) Includes 10,525 shares registered in the name of Mr. Beres and his
wife, as joint tenants, as to which Mr. Beres has shared voting and
investment power; 1,247 shares held in accounts for Mr. Beres'
children for which he is custodian; and 2,289 and 1,221 shares held in
self-directed individual retirement accounts ("IRA's") for the benefit
of Mr. Beres and Mrs. Beres, respectively.
(4) Includes 100,995 shares registered in the name of Mrs. Roberta C.
Fedderly 1991 Revocable Trust; 96,726 shares registered to the Sanford
Fedderly 1991 Revocable Trust; and 1,080 shares held in a
self-directed IRA for the benefit of Mr. Fedderly.
(5) Includes 120 shares registered in the name of Mr. Gerardin and his
wife, as joint tenants, as to which Mr. Gerardin has shared voting and
investment power; and 9,404 shares held in a self-directed IRA for the
benefit of Mr. Gerardin.
(6) Includes 61,656 shares registered in the name of Mrs. Gravitter; and
19,433 shares held under agreements with members of Mr. Gravitter's
family under which he exercises no voting power, but has right of
first refusal on sale of stock.
(7) Includes 16,500 shares registered in the name of Mrs. Karbiner; and
48,877 shares and 1,303 shares held in self-directed IRAs for the
benefit of Mr. Karbiner and Mrs. Karbiner, respectively.
(8) Includes 119,690 shares registered in the name of Mrs. McGarry.
(9) Includes 5,920 shares in accounts for Mr. Orth's children for which he
is custodian.
(10) Includes 8,316 shares registered in the name of Mr. Puetz and his wife
as joint tenants, as to which Mr. Puetz has shared voting and
investment power; 3,105 shares registered in the name of Mrs. Puetz;
and 7,896 shares held in a self-directed IRA for the benefit of Mr.
Puetz.
(11) Includes 33,020 shares registered in the name of NDC, LLC, of which
Mrs. Ulrich is a principal member; and 116,326 shares held in
self-directed IRAs for the benefit of Mrs. Ulrich. Includes 1,912,687
shares held under agreements with members of Mrs. Ulrich's family
(including 79,569 shares shown as beneficially owned by Mr. McGarry
and 113,381 shares showed as beneficially owned by Mr. Ulrich, Jr.)
under which she exercises no voting power but has right of first
refusal on sale of stock. Excludes shares held by the Agatha T. Ulrich
Marital Trust. Excludes 303,821 shares held under an agreement with
another shareholder of the Corporation and his transferees under which
Mrs. Ulrich exercises no voting power but has right of first refusal
on sale of stock.
(12) The trustees are Ronald K. Puetz, George A. Dionisopoulos and Kathleen
L. McGarry. Includes 1,912,687 shares held under agreements with
members of Mrs. Ulrich's family (including 79,569 shares shown as
beneficially owned by Mr. McGarry and 113,381 shares showed as
beneficially owned by Mr. Ulrich, Jr.) under which the Trust exercises
no voting power but has right of first refusal on sale of stock. The
trust has sole voting and dispositive power over 36,341 shares and
shared dispositive power over 1,912,687 shares. Excludes 303,821
shares held under an agreement with another shareholder of the
Corporation and his transferees under which the Trust exercises no
voting power but has right of first refusal on sale of stock. The
address of the trust is c/o Foley & Lardner, 777 E. Wisconsin Avenue,
Milwaukee, Wisconsin 53202.
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(13) Includes 6,532 shares registered in the name of Mr. Ulrich and his
wife as joint tenants over which he has shared voting and investment
power; 19,561 shares registered in the name of Mr. Ulrich's wife; and
54,861 shares held in accounts for Mr. Ulrich's minor children.
(14) Based on Schedule 13D filed January 4, 2007. The three trustees of the
Ulrich Voting Trust, Mr. David Ulrich, Mrs. Kathleen McGarry and Mr.
Thomas Ulrich, acting by majority action, have the authority to vote
such shares in their discretion. The Voting Trust Agreement provides
that the voting trust certificates representing the shares shall be
issued in four equal amounts as a gift for the benefit of Mrs.
Ulrich's children, Mr. David Ulrich, Mrs. Kathleen McGarry, Mr. Thomas
Ulrich and the Marilyn Ulrich Graves Trust, a trust established for
the benefit of Marilyn T. Ulrich-Graves. The address of the Ulrich
Voting Trust is P.O. Box 180437, Delafield, Wisconsin 53018.
(15) Includes 81,156 shares registered in the name of Mr. Werry and his
wife as joint tenants, as to which Mr. Werry has shared voting and
investment power. Includes 7,284 shares registered in the name of Mrs.
Werry.
(16) Includes 25,726 shares registered in the name of the Scott A. Wilson
and Susan J. Wilson Trust, as to which Mr. Wilson has shared voting
and investment power; and 10,224 shares and 4,220 shares held in
self-directed IRA's for the benefit for Mr. Wilson and Mrs. Wilson,
respectively.
(17) Excludes shares held by the Agatha T. Ulrich Marital Trust, of which
no director or officer has beneficial ownership.
The Corporation knows of no contractual arrangements, including the pledge of
its securities, which might result in a change of control of the Corporation.
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ELECTION OF DIRECTORS
The Board of Directors proposes that the fourteen (14) nominees named below be
elected to serve as directors for the ensuing year and until their successors
are elected and qualified. All fourteen (14) directors will serve one-year
terms. Proxies received by the Board of Directors will be voted FOR the election
of the following fourteen (14) persons, unless otherwise indicated, but, if any
such nominee is unable to serve due to presently unforeseen circumstances,
proxies may be voted for another person nominated by the Board of Directors.
All of the persons nominated as directors are currently directors of the
Corporation. All of the nominees have consented to serve if elected, and the
Board of Directors is not aware of any nominee who may be unable to serve as a
director. The directors and officers of the Corporation beneficially own a
majority of the Corporation's outstanding Common Stock. Accordingly, assuming
that all directors and executive officers vote for the nominees listed below,
election of such nominees is assured.
Director Principal Occupation During the
Name Since Age Past 5 Years and Other Directorships
---- ----- --- ------------------------------------
Frank J. Bauer 1990 80 President of Frank Bauer Construction
Company, Inc. Director of Tri City
National Bank.
William N. Beres 2002 49 Chief Financial Officer of Wisvest
Corporation,a wholly owned subsidiary
of Wisconsin Energy Corp. since
September, 1998. Vice President of
Minergy Corp., a wholly owned
subsidiary of Wisconsin Energy Corp.
since May, 2003. Member of the board
of directors for Centerpoint Wispark
Land Company LLC since December,2004.
Member of the board of directors of
ReGENco, LLC since December, 2005.
Director of Tri City National Bank.
Sanford Fedderly 1980 72 Retired Registered Pharmacist.Retired
President of Tri City Pharmacy,
Inc., Oak Creek, Wisconsin. Director
of Tri City National Bank.
Scott D. Gerardin 2002 48 Senior Vice President,General Counsel
and Assistant Secretary of the
Corporation since January 2005.
Senior Vice President and General
Counsel of Tri City National Bank.
Director of Tri City National Bank.
William Gravitter 1980 78 President of Hy-View Mobile Home
Park. Director of Tri City National
Bank.
Henry Karbiner, Jr. 1980 66 President, Chief Executive Officer
and Chairman of the Board of the
Corporation since October 1998.
Treasurer of the Corporation since
April 1980. Vice President and
Secretary of the Corporation from
January 1989 to October 1998.
Chairman of the Board and Chief
Executive Officer of Tri City
National Bank.
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Christ Krantz 1980 82 President of Krantz Realty, Inc. Vice
President and Secretary of KRK, Inc.,
which owns Ramada Airport Motel,
Milwaukee, Wisconsin. Partner in
Veterans Linen Supply Company.
Director of Tri City National Bank.
Brian T. McGarry 2005 56 Retired Vice President of Tri City
National Bank. Director of Tri City
National Bank.
Robert W. Orth 1996 60 Senior Vice President of the
Corporation since 1996. Executive
Vice President and Director of Tri
City National Bank.
Ronald K. Puetz 1988 58 Executive Vice President of the
Corporation since June 2000. Senior
Vice President of the Corporation
from January 1990 to June 2000.
President of Tri City National Bank.
Vice President and Treasurer of NDC,
LLC. Director of Tri City National
Bank.
Agatha T. Ulrich 1999 78 Chairman and Director of NDC, LLC.
Director of Tri City National Bank.
David A. Ulrich, Jr. 1997 46 Retired Vice President and Director
of Mega Marts, Inc. Retired Vice
President and Director of NDC, Inc.
Director of Tri City National Bank.
William J. Werry 1980 80 Retired Unit President of Tri City
National Bank. Director of Tri City
National Bank.
Scott A. Wilson 1990 60 Senior Vice President and Secretary
of the Corporation since October
1998. Executive Vice President and
Director of Tri City National Bank.
There is a family relationship between several of the nominees for directorship.
Mr. Ulrich is Mrs. Ulrich's son, Mr. Bauer is Mrs. Ulrich's brother and Mr.
McGarry is Mrs. Ulrich's son-in-law.
Directors' Fees and Benefits
- ----------------------------
Non-employee directors of the Corporation receive $300 for each general Board
meeting of the Corporation attended, $1,500 for each general Board meeting of
Tri City National Bank attended, plus a $14,000 annual retainer. In addition,
Messrs. Gravitter, Fedderly and Krantz receive annual compensation of $17,900,
$12,150 and $5,600, respectively for their service on the Executive Committee.
Non-employee members of the loan committee receive compensation of $500 per
meeting attended, except for the Chairman, who receives $750 per meeting
attended. Non-employee members of the audit committee receive compensation of
$250 per meeting attended, except the Chairman, who receives an annual stipend
of $10,000. Non-employee members of the CRA/compliance committee receive
compensation of $250 per meeting attended. None of the directors receive any
stock options or other equity compensation for their service as a director or on
any particular committee.
6
None of the Corporation's inside directors (directors who are also officers of
the Corporation) received any compensation for their service on the
Corporation's Board. The following table sets forth information regarding the
fees paid to the Corporation's outside directors during 2006.
Fees Earned
or Paid in Cash
Name ($)
---- ---
Frank J. Bauer $19,200
William N. Beres 28,450
Sanford Fedderly 34,600
William Gravitter 37,100
Christ Krantz 25,800
Brian T. McGarry 19,200
Agatha T. Ulrich 19,200
David A. Ulrich, Jr. 20,200
William J. Werry 22,200
The Corporation's Board of Directors has standing Audit and Executive
Committees. The Executive Committee is composed of Messrs. Fedderly, Gravitter,
Karbiner, Krantz and Puetz. The Executive Committee's purpose is to exercise the
powers of the full Board between regular meetings of the Board. During 2006, the
Executive Committee held no meetings. The Corporation has an Audit Committee
composed of independent directors. Information regarding the functions performed
by the Audit Committee, its membership, and the number of meetings held during
the fiscal year, is set forth in the "Report of the Audit Committee," included
in this proxy statement.
The Board of Directors has not appointed a nominating committee. The review of
recommendations for, and the selection of, nominees to Board membership is
handled by the Board serving as a committee of the whole. Due to the infrequent
turnover in the Board, the Board has determined that it is not necessary or
appropriate at this time to establish a separate nominating committee. No
nominating committee charter has been adopted by the Board of Directors serving
in their capacity as a committee of the whole. All of the directors except
Messrs. Gerardin, Karbiner, Orth, Puetz, Wilson and Werry are independent in
accordance with the definition of independence in Rule 4200(a)(15) of the NASD
listing standards.
The Board of Directors does not have a formal process for considering nominees
whose names are submitted to it by shareholders because it believes that the
informal consideration process has been adequate given the historical absence of
shareholder proposals. If shareholders were to recommend nominees for directors,
the full Board of Directors would consider such persons. Shareholders are
entitled to nominate persons from the floor at the annual meeting, but it is
intended that the proxies solicited with the proxy statement will be voted for
the slate of the fourteen persons listed in the table above as nominees to the
Board of Directors.
The Board of Directors has generally identified nominees based upon suggestions
by non-management directors, management members and/or shareholders. The Board
of Directors considers factors important for potential members of the Board,
including the individual's integrity, general business background and
experience, experience with the banking industry, and the ability to serve on
the Board of Directors. The Board of Directors does not evaluate proposed
nominees differently based upon who made the proposal.
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The Board of Directors does not have a compensation committee, because
compensation of the executive officers of the Corporation is reviewed by the
Board serving as a committee of the whole. The Corporation believes that each of
the Board members should have input into the compensation of the Corporation's
executive officers and, because its compensation system is not complex, it is
not necessary to seek the recommendations of a separate compensation committee.
The Board does not operate under any formal written charter in its capacity as a
committee of the whole. The duties of the Board in its capacity as the
Corporation's compensation committee include the review and approval of the
salaries and other compensation of the Corporation's executive officers, which
are recommended to the Board by the Corporation's President. The Board did not
retain the services of any compensation consultants in carrying out its duties
during 2006.
The Board of Directors held five meetings during 2006. All incumbent directors
attended 75% or more of the meetings of the Board and the committees on which
they served during 2006. Directors are encouraged to attend the annual meeting
of shareholders, but the Corporation has not adopted a formal policy requiring
attendance at the annual meeting. All of the incumbent directors attended the
2006 annual meeting of shareholders.
The Board of Directors currently does not have a formal process for shareholders
to send communications to the Board because it believes that informal
communications are sufficient to communicate questions, comments and
observations that could be useful to the Board. However, shareholders wishing to
communicate with the Board of Directors may send communications directly to
Henry Karbiner, Jr., Chairman of the Board, c/o Tri City Bankshares Corporation,
6400 South 27th Street, Oak Creek, Wisconsin 53154.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Corporation's financial reporting process on
behalf of the Board of Directors. The Audit Committee is governed by a written
charter approved by the Board of Directors. A copy of this charter is included
in Appendix A of the Proxy Statement for the 2006 Annual Meeting of
Shareholders. The current members of the Audit Committee, all of whom are
non-employee directors, are Messrs. Beres (Chair), Fedderly, Krantz and McGarry.
All of the members of the Audit Committee are independent in accordance with the
definition of independence in Rule 4200(a)(15) of the NASD listing standards.
The Board of Directors has determined that it currently has one audit committee
financial expert, Mr. Beres, serving on its Audit Committee.
Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls. In fulfilling its
oversight responsibilities, the Audit Committee reviewed the audited financial
statements in the Annual Report with management including the discussion of the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in the
financial statements.
The Audit Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Corporation's accounting
principles and such other matters as are required to be discussed with the Audit
Committee under generally accepted auditing standards. In addition, the Audit
Committee has discussed with the independent auditors the matters required to be
discussed by Statement on Accounting Standards No. 61 and the auditors'
independence from management and the Corporation. The Audit Committee has
received the written disclosures from Virchow, Krause & Company, LLP required by
the Independence Standards Board Standard No. 1.
The Audit Committee discussed with the Corporation's internal and independent
auditors the overall scopes and plans for their respective audits. The Audit
Committee meets with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of the Corporation's internal controls, and the overall quality of
the Corporation's financial reporting. The Audit Committee held five meetings
during fiscal 2006.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended 2006 for filing with the Securities and Exchange
Commission. The Audit Committee and the Board have also recommended the
selection of the Corporation's independent auditors.
8
William N. Beres, Audit Committee Chair
Sanford Fedderly, Audit Committee Member
Christ Krantz, Audit Committee Member
Brian McGarry, Audit Committee Member
March 20, 2007
BOARD OF DIRECTORS (COMPENSATION COMMITTEE) REPORT
The Board of Directors, serving as a Compensation Committee of the whole,
oversees the Corporation's executive compensation program. In fulfilling its
oversight responsibilities, the Board of Directors reviewed and discussed with
management the Compensation Discussion and Analysis set forth in this Proxy
Statement.
In reliance on the review and discussion referred to above, the Board adopted
the Compensation Discussion and Analysis for inclusion in the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and the
Corporation's Proxy Statement in connection with its 2007 Annual Meeting of
Stockholders, to be filed with the Securities and Exchange Commission.
This report is submitted on behalf of the current members of the Board of
Directors, serving in their capacity as the Corporation's Compensation
Committee:
Frank J. Bauer William N. Beres Sanford Fedderly
Scott D. Gerardin William Gravitter Henry Karbiner, Jr.
Christ Krantz Brian T. McGarry Robert W. Orth
Ronald K. Puetz Agatha T. Ulrich David A. Ulrich, Jr.
William J. Werry Scott A. Wilson
COMPENSATION DISCUSSION AND ANALYSIS
The general compensation objective of the Corporation is to attract and retain
officers of the highest quality possible by paying a fair and competitive wage,
while continuing to protect the best interests of shareholders by retaining
current members of a proven and successful management team.
The executive compensation program is designed to reward each executive's
specific job performance, contribution to the growth, profitability and
stability of the Corporation and its banking subsidiary. The Board also
considers each executive's contribution to the general success of the
Corporation, as well as specific results of each executive's area of
responsibility, in evaluating and setting such executive's compensation.
Salaries and other executive compensation elements are recommended by the
President and submitted to the full Board of Directors for approval. After
reviewing the recommendations of the President, the non-executive Board members
discuss any factors they deem relevant in assessing such recommendations. There
is no set agenda or specific list of factors to be discussed by the Board in
making their determination.
Executive compensation consists of two primary components: base salary and
annual cash bonus. The Corporation continues to follow its long-standing policy
of not providing its executives with many of the long-term compensation awards
or non-cash perquisites given to executives of similar companies. Executives are
not awarded any stock rights, options, warrants or stock appreciation rights as
part of their overall compensation package. Furthermore, the Corporation does
not provide reimbursement for any of its executives' memberships in country
clubs or other social clubs, nor do any executives receive any special
retirement benefits or deferred compensation. Executive officers participate in
the same retirement plan provided to non-executive employees of the Corporation.
BASE SALARY. The Board believes that paying a competitive base salary is a key
component of the Corporation's ability to attract and retain high-quality
executive officers. While there is no specific relationship between corporate
performance and base salary awarded to any executive, base salary for each of
the executive officers for 2006 was recommended to the Board by the President of
9
the Corporation taking into consideration the following factors, without
assigning any relative weight or importance to any single factor:
1. Current compensation;
2. Cost of living;
3. Salaries paid to executives at other banks based upon a review of
publicly available information with respect to other similarly
situated financial institutions and the President's general knowledge
of salaries paid to comparable executives in the industry;
4. Performance of the bank during the prior year as measured by a variety
of standard statistical and other performance measures;
5. Prospects of future growth and performance; and
6. The individual performance of the executive officers as evaluated
informally by the Executive Vice President and President of the
Corporation.
Each of the employee directors is recused from the Board's deliberations
regarding executive compensation with the exception of the President of the
Corporation, who participates in and makes recommendations regarding the
executives' compensation, including his own. The base salaries of the executive
officers that were recommended to the Board by the President of the Corporation
for 2006 were approved by the Board without adjustment.
Annual Cash Bonus. The annual cash bonus portion of executive compensation is
determined subjectively by the Board of Directors. Bonuses for all officers of
the Corporation, including executive officers and officers of the banking
subsidiary, are calculated as a percentage of the officer's base compensation.
All officers are awarded the same percentage of their salary. The Board uses as
a general guide a matrix based on its banking subsidiary's return on average
assets, whereby a minimum ratio of 1.25% must be achieved before cash bonuses
are awarded to officers. Return on average assets exceeding 1.25% during any
year suggests bonus awards for that year based upon a formula whereby, as the
return on average assets increases, the corresponding bonus percentage
increases. This matrix is used solely as a general guide and is, by no means,
the determinative factor in establishing the executive bonus percentage. The
Board of Directors set the bonus percentage for each of the executive officers
for 2006 at 5% of their respective base salary. The Board approves such bonuses
annually in the year they are paid.
Impact of Accounting and Tax Treatments. Section 162(m) of the Internal Revenue
Code (the "Code") prohibits publicly held companies, such as the Corporation,
from deducting certain compensation to any one executive officer in excess of
$1,000,000 during the tax year. The Board of Directors does not believe that it
is likely that any individual's compensation will exceed $1,000,000 in any year.
Accordingly, the Board does not believe that Internal Revenue Code Section
162(m) is likely to be triggered by the Corporation's current compensation
program.
10
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table shows cash and non-cash compensation for the year ended
December 31, 2006, for the persons serving as the Baylake's "principal executive
officer" and "principal financial officer" during 2006 and for each of the
Corporation's executive officers who were serving those capacities at December
31, 2006.
Annual
Base Cash All Other
Name Salary Bonus Compensation Total
and Principal Position Year ($) ($) ($)(1) ($)
---------------------- ---- --- --- ------ ---
Henry Karbiner, Jr., 2006 $475,090 $23,755 $11,000 $509,845
President and Chief Executive
Officer and Treasurer
Ronald K. Puetz, 2006 294,000 14,700 11,000 319,700
Executive Vice President
Robert W. Orth, 2006 245,100 12,255 11,000 268,355
Senior Vice President
Scott A. Wilson, 2006 237,300 11,865 11,000 260,165
Senior Vice President and
Secretary
Scott D. Gerardin, 2006 145,000 7,250 7,612 159,862
Senior Vice President, General
Counsel and Assistant Secretary
(1) All other compensation represents the Corporation's matching
contribution to the employee's 401(k) plan.
Plan-Based Award Grants in Last Fiscal Year
- -------------------------------------------
The Corporation did not award any stock options to its executive officers as
part of its overall compensation program in 2006.
Outstanding Equity Awards at Fiscal Year End
- --------------------------------------------
There were no shares of the Corporation's common stock subject to outstanding
equity awards that were unexercised or that have not yet vested at December 31,
2006.
2006 Option Exercises and Stock Vested
- --------------------------------------
There were no stock option awards exercised by any executive officer of the
Corporation in 2006, nor were there any shares acquired upon the vesting of any
restricted stock awards.
Pension Benefits
- ----------------
The Corporation does not maintain any pension benefit plans for its officers or
directors that would otherwise be disclosable in these proxy materials.
11
2006 Nonqualified Deferred Compensation
- ---------------------------------------
The Corporation did not maintain any nonqualified deferred compensation plan for
the benefit of any of its executive officers as of December 31, 2006.
Potential Payments Upon Termination or Change in Control
- --------------------------------------------------------
None of the executive officers of the Corporation has any arrangement that
provides for severance payments. Additionally, none of the executive officers of
the Corporation is entitled to payment of any benefits upon a change-in-control
of the Corporation.
Agreements With Executive Officers
- ----------------------------------
The Corporation does not have any employment agreements with any of its
executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following members of the Board of Directors are officers of the Corporation
and its banking subsidiary:
Henry Karbiner, Jr. Robert W. Orth Ronald K. Puetz
Scott A. Wilson Scott D. Gerardin
LOANS AND OTHER TRANSACTIONS WITH MANAGEMENT
The Corporation has never made any loans to any of its officers or directors.
However, in the ordinary course of business, the Corporation's banking
subsidiary made loans during 2006 to officers and directors of the Corporation,
and to business firms in which officers and directors of the Corporation are
officers, partners or in which they have a substantial interest. The loans made
by the Corporation's banking subsidiary were made to the Corporation's officers
and directors and certain of the companies with which they are associated in the
ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable loans to
unaffiliated persons or firms, and do not involve more than a normal risk of
collectibility or present other unfavorable features.
Mrs. Agatha T. Ulrich, director of the Corporation, is a principal member in a
LLC that owns buildings occupied by the Corporation's central office in Oak
Creek, and a Tri City National Bank branch office located in Milwaukee. The
central office building lease has a term through 2011 and the branch office has
a lease with a term through 2010. The annual rent for 2006 paid in connection
with both of the aforementioned leases was $265,448. Rent is subject to
adjustment as a result of increases in the consumer price index. Pursuant to the
central office lease only, the Corporation is also obligated to pay its
proportionate share of property taxes, insurance and maintenance costs
associated with the building.
In addition, in 2006, Mr. William J. Werry received $17,900 for consulting
services performed for the Corporation. His current annual compensation is
$17,900.
Pursuant to the Corporation's 2003 Stock Purchase Plan directors and officers
purchased an aggregate of 28,800 shares of common stock of the Corporation
(representing 0.33% of the total outstanding common stock of the Corporation)
from the plan's inception thru January 31, 2006. This plan was terminated by the
Board of Directors on October 11, 2006.
The disinterested members of the Board of Directors approve, in advance, all
transactions with related parties. In addition, in accordance with banking
regulations, the Board of Directors reviews all loans made to a director or
executive officer in an amount that, when aggregated with the amount of all
other loans to such person and his or her related interests, exceed the greater
of $25,000 or 5% of the Corporation's capital and surplus (up to a maximum of
$500,000) and such loan must be approved in advance by a majority of the
disinterested members of the Board of Directors.
12
OTHER BUSINESS
The Board of Directors knows of no other business, which may come before the
annual meeting. In the event that any other business not known or determined at
this time does properly come before the meeting, it is intended that the persons
named in the proxy shall vote in accordance with their best judgment.
VOTING OF PROXIES
The presence in person or by proxy, of the holders of a majority of the shares
of the Common Stock outstanding on the record date is required for a quorum with
respect to the matters on which action is to be taken at the annual meeting.
Abstentions and broker non-votes (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner to vote shares as to a matter with respect to which the brokers or
nominees do not have discretionary power to vote) will be treated as present for
purposes of determining a quorum.
Proxies received by the Board of Directors will be voted in accordance with the
specifications indicated by the shareholder and unless authority to vote upon
the election of the directors, or as to individual nominees, is withheld, the
proxies will be voted FOR all of the nominees listed in the proxy statement.
Directors are elected by a plurality of the votes cast by holders of the
Corporation's Common Stock entitled to vote at a meeting at which a quorum is
present. In other words, the fourteen directors who receive the largest number
of votes will be elected as directors. Any shares not voted, whether by withheld
authority, broker non-vote or otherwise, will have no effect in the election of
directors except to the extent that the failure to vote for an individual
results in another individual receiving a larger number of votes. Any votes
attempted to be cast "against" a candidate are not given legal effect and are
not counted as votes cast in an election of directors.
INDEPENDENT AUDITORS
The Corporation engaged Virchow Krause to audit the Corporation's financial
statements for the year ended December 31, 2006. During the year ended December
31, 2006, the Corporation did not consult with Virchow Krause regarding any of
the matters or events set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.
As of the date of this proxy statement, the Audit Committee has selected Virchow
Krause as independent auditors for the 2007 year-end audit.
AUDIT FEES. The aggregate fees billed for audit services rendered by Virchow
Krause in 2006 and 2005 totaled $72,875 and $73,325 respectively. Services in
this category for 2006 and 2005 consisted of:
o Audits of the consolidated financial statements;
o Reviews of the financial statements included in the Corporation's
Quarterly Reports on Form 10-Q;
o Examination of management's assertion regarding internal control over
financial reporting; and
o Services associated with registration statements, periodic reports and
other documents filed with the Securities and Exchange Commission.
AUDIT-RELATED FEES. The aggregate fees billed in 2006 and 2005 for assurance and
related services provided by Virchow Krause that are reasonably related to the
performance of the audit or review of the Corporation's financial statements
totaled $15,375 and $12,325 respectively. Services in this category in 2006 and
2005 consisted primarily of:
o Financial statement audits of employee benefit plan; and
o Agreed-upon procedures reports related to an educational loan program
TAX FEES. The aggregate fees billed in 2006 and 2005 for professional services
rendered by Virchow Krause, for tax compliance, tax advice and tax planning,
totaled $9,690 and $13,320 respectively. Services in this category in 2006 and
2005 consisted primarily of:
13
o Tax planning and other non-compliance consultation, including tax
audit assistance; and
o Tax compliance, including federal and state tax return preparation.
ALL OTHER FEES. There were no fees billed in 2006 and 2005 for other
professional services provided by Virchow Krause.
The Audit Committee has considered whether the provision of other non-audit
services is compatible with the independent auditors' independence and satisfied
itself as to the auditors' independence.
Representatives of the firm of Virchow, Krause & Company, LLP are expected to be
present at the annual meeting and will have an opportunity to make a statement
if they so desire and will be available to respond to appropriate questions.
The Audit Committee pre-approves all audit and allowable non-audit services
provided by the independent auditors. These services may include audit services,
audit-related services, tax services and other services.
SHAREHOLDERS PROPOSALS
Proposals by shareholders sought to be included in the Corporation's proxy
statement for its 2008 Annual Meeting of Shareholders must be received by the
Corporation no later than January 8, 2008. The Corporation's By-Laws currently
do not restrict shareholders from making proposals or director nominations at
the annual meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's
executive officers, directors and 10% shareholders to file reports with the
Securities and Exchange Commission disclosing their ownership, and changes in
their ownership of stock in the Corporation. Copies of these reports must also
be furnished to the Corporation. Based solely on a review of these copies, the
Corporation believes that during 2006, its officers, directors and 10%
shareholders complied with all filing requirements under Section 16(a) of the
Securities Exchange Act of 1934.
FORM 10-K
A COPY OF THE CORPORATION'S FORM 10-K WHICH AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 2006 MAY BE OBTAINED WITHOUT
CHARGE BY ANY PERSON WHO WAS A BENEFICIAL OWNER OF THE CORPORATION'S SHARES AS
OF THE APRIL 26, 2007 RECORD DATE BY WRITTEN REQUEST TO SCOTT A. WILSON,
SECRETARY OF THE CORPORATION, 6400 SOUTH 27TH STREET, OAK CREEK, WISCONSIN
53154, (414) 761-1610.
By Order of the Board of Directors
/s/Scott A. Wilson
Scott A. Wilson, Secretary
Oak Creek, Wisconsin
May 7, 2007
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, PLEASE
COMPLETE, SIGN AND RETURN THE PROXY AS SOON AS POSSIBLE WHETHER OR NOT YOU
EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON.
14
PROXY TRI CITY BANKSHARES CORPORATION PROXY
ANNUAL MEETING - JUNE 13, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William Gravitter and Henry Karbiner, Jr.
and each of them, with full power to act without the other and with full power
in each to appoint his substitute or substitutes, as the undersigned's proxy to
vote all of the shares which the undersigned may be entitled to vote at the
Annual Meeting of the Shareholders of Tri City Bankshares Corporation, a
Wisconsin corporation, to be held at Tri City National Bank, 6400 South 27th
Street, Oak Creek, Wisconsin 53154, on Wednesday, June 13, 2007 at 9:30 a.m.,
and at any adjournment or adjournments of said meeting, on the following
matters:
1. Election of Directors :
FOR all nominees listed below |_| WITHHOLD AUTHORITY |_|
(or their substitutes if any To vote for all nominees
nominees shall be unable to listed below
stand for election)
FRANK J. BAUER, WILLIAM N. BERES, SANFORD FEDDERLY, SCOTT D. GERARDIN, WILLIAM
GRAVITTER, HENRY KARBINER, JR., CHRIST KRANTZ, BRIAN T. McGARRY, ROBERT W. ORTH,
RONALD K. PUETZ, AGATHA T. ULRICH, DAVID A. ULRICH, JR., WILLIAM J. WERRY,
SCOTT A. WILSON
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
(Over)
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR each of the nominees.
2. In their discretion on such other business as may properly come before
the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER; IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES.
Date , 2007
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Please sign exactly as name appears hereon.
For joint accounts, all owners should sign.
Executors, Administrators, Trustees, etc.,
should so indicate when signing.